A recent Wall Street Journal story (“Postal Cuts are a Dead Letter in Congress,” March 1, 2012) says it all. The Postal Service is working hard to cut costs in light of collapsing mail volume, but members of Congress have pledged to “’draw on a number of tactical tolls’ to delay or dissuade the postal service, including public protests, withholding support for major postal-related legislation, and adding language to committee reports instructing the agency to study the matter further.”
As a result, a massive taxpayer bailout of the Postal Service is coming, but this time Congress can’t blame Wall Street. This bailout will be 100 percent Made in Washington.
The internet is, of course, biting hard into mail volume. The Postal Service’s most profitable class—first-class mail—is down over 25 percent since its peak in 2001, and the Service just incurred quarterly losses of over $3 billion. The Postal Service itself says it will lose over $18 billion annually by 2015 unless something changes.
The full reality is much worse. Unless Congress frees up the Postal Service—and fast—Postal Service paychecks will soon start bouncing like Super Balls. Postmaster General Patrick Donahoe announced that the Service will run out of cash by October. If gas prices continue to rise, it will be a lot sooner. Congress won’t risk delivery of Social Security checks right before an election, so it will crack open the old taxpayer checkbook. Taxpayers will be faced with a bill on the order of the $50 billion GM bailout, this time of a government-owned firm.
None of this was preordained. Postal services around the world have seen this coming for decades, and have adjusted by corporatization and privatization, and by giving postal managers the freedom to adjust to the new communications marketplace. They have allowed managers to make basic business decisions, such as how to run their delivery network.
The United States is unique in its antediluvian postal policy. Congress tells the postal managers to “run the USPS in a businesslike fashion,” and then blocks every decision they make. Congress won’t even let the Service cut Saturday delivery in the face of collapsing revenue, must less manage its sorting network.
Just as hope often triumphs over experience, Postal management keeps trying. It announced new plans to close or consolidate 223 mail processing plants that support some 35,000 jobs, and is seeking an increase in first-class postage to 50 cents in a bid to raise more revenue. But visionaries in the Senate, such as Bernie Sanders (I-Vermont), have called it a dead letter. Maurice Hinchey (D-New York) in the House said, “I’m going to do everything I can to block their efforts.” Such members of Congress are displaying anti-leadership by wringing every ounce out the Service they can and dumping as much of the cost as they can on taxpayers.
Rick Geddes is an associate professor at Cornell University and a visiting scholar at the American Enterprise Institute. Geddes authored the AEI working paper “Return to Sender: Reforms for the Failing Postal Service.”